Russian ban may impact produce prices

Total Produce has warned that Russia’s 12-month ban on EU-sourced fruit and vegetables may impact prices, due to a resulting excess of supply, but stressed that sanctions should not materially affect its full-year results.

The Dublin-based fruit distributor — the former general produce arm of Fyffes — yesterday reported a near 6% annualised rise in first half pre-tax profits to €24.2m, with revenues down by nearly 2% at €1.59bn, with price declines eating into volume growth.

Nevertheless, management described the first half performance as “robust”, particularly when measured against a strong comparative period last year, and kept its full-year guidance unchanged.

“We are pleased to announce a 5% increase in the interim dividend to 0.64c,” said chairman Carl McCann.

“The group is maintaining its full-year adjusted earnings per share guidance of 8.40c-9.40c per share.”

Mr McCann added that Total Produce’s growth will continue to be driven by successful acquisitions, following on from recent agreements to purchase assets in the Netherlands and the US.

Earlier this year, the company agreed to buy 50% of Dutch firm All Seasons Fruit and a 45% stake in Californian company, Eco Farms.

On the question of Russia, Total Produce said that its sales to the country are less than 2% of total revenue and that sanctions could be offset by EU market intervention initiatives.

“The group continues to monitor developments and the sanctions are not expected to materially impact the group,” Total Produce added.

Taking an expected challenging first half into account, Declan Morrissey of Davy Stockbrokers said: “full-year guidance has been maintained; acquisitions completed in the period and post-event are expected to contribute a modest contribution toward the full-year result at an earnings per share levels.

“Our full-year earnings per share forecast, of 8.9c, implies 2.9% growth in the second half.”